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Evaluating Accounting Standards: A Comment on Ramanna’s ‘The International Politics of IFRS Harmonization’

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  • Madsen Paul E.

Abstract

Ramanna (this issue) argues that the big question at the centre of IFRS research is: “is the political process underlying IFRS facilitating the production of economically efficient standards?”, and presents new evidence that is informative about the political process underlying IFRS adoption decisions. In this comment, I explore how questions about the economic efficiency of standards might come to be answered. The current expertise-based approach to the evaluation of accounting standards is likely limited because it requires the deployment of expertise where it is likely least valuable, in low-validity/low feedback environments. I propose regulatory field experimentation as a potential alternative means of accumulating the knowledge required to perform effective expertise-based evaluations of standards. But field experimentation could be costly and politically controversial. The proposal to permit multiple accounting standard-setters to compete in a given jurisdiction may be an effective means of reducing the reliance of the evaluative system on expertise, replacing it with market feedback.

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  • Madsen Paul E., 2013. "Evaluating Accounting Standards: A Comment on Ramanna’s ‘The International Politics of IFRS Harmonization’," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(2), pages 1-15, January.
    • Handle: RePEc:bpj:aelcon:v:3:y:2013:i:2:p:1-15:n:5
    DOI: 10.1515/ael-2013-0031
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    References listed on IDEAS

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